Does an Aplus franchisee's compliance with minimum insurance requirements relieve them of their indemnification obligations under Section 7.3 of the agreement?

According to Aplus's 2024 Franchise Disclosure Document, compliance with the minimum insurance requirements does not relieve a franchisee of their indemnification obligations as outlined in Section 7.3 of the agreement. Aplus franchisees are required to maintain insurance policies that meet the franchisor's minimum standards at all times during the term of the agreement. These policies must be written by an insurer with an A.M. Best rating of A-VII or higher and include a waiver of subrogation in favor of Aplus and its affiliates.

Even if an Aplus franchisee meets all insurance obligations, they are still responsible for indemnifying Aplus and its related parties from losses and expenses related to the business. This indemnification extends to litigation, claims, demands, investigations, and settlements arising from the operation of the Aplus business. The franchisee's duty to indemnify Aplus exists regardless of whether the losses stem from strict or vicarious liability, but it does not apply to liability arising from the gross negligence of Aplus, except in cases of joint liability where the franchisee's comparative or contributory negligence is involved.

This means that even with proper insurance coverage, an Aplus franchisee could still be financially responsible for significant costs if a claim exceeds the insurance coverage limits or falls outside the policy's scope. The franchisee must promptly notify Aplus of any event requiring indemnification, and Aplus has the option to assume the defense and/or settlement of the claim, though this does not alter the franchisee's indemnification obligations. Aplus retains the right to take necessary actions to protect its indemnities or the Aplus system.